Singapore’s Big Loser This Week: Food Empire Holdings Limited

Food Empire Holdings Limited (SGX: F03) fell 11.8% for the week, closing at S$0.30 on Thursday. Comparatively, the Straits Times Index (SGX: ^STI), slumped 2.4% during the same period. This makes Food Empire a big loser in the local market this week.

The company is a food and beverage (F&B) brand owner and manufactures instant beverage products, frozen convenience foods, confectionery, and snacks. Its main market is Russia. In 2013, the country contributed to 58.2% of Food Empire’s total turnover of US$263 million.

This week saw the Russian rouble fall to a new low against the US dollar. Falling oil prices and sanctions on Russia by Western countries contributed to the downfall. To counter the free-fall, Russia’s central bank raised its key rate from 10.5% to 17%. Currently, 1 US dollar buys 61 Russian rouble.

The declining Russian currency may hit Food Empire further. For the nine months ended 30 September 2014, the firm saw a net loss of US$1.4 million as compared to a profit after tax of US$11.7 million exactly a year ago. It reasoned out that the dismal showing was due to “substantial depreciation of the currencies of its two largest markets, Russia and Ukraine against the US dollar which is the Group’s reporting currency”.

It signed off by saying that any continuation of the weakening of the Russian Rouble will not bode well for the firm’s overall profitability going forward. It seems that the fear will come to pass.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.